SC34: How to build a 7 figure ecommerce business in 1 year while still working a day job

Jon has been selling on Amazon for one year and during that time he has build a 7 figure ecommerce business along with his business partner. The neat part about Jon's story is that he still works a full time day job. If you're looking for a bit of motivation this episode should do the trick.

Jon also shares how important it was for him to reinvest into his business to truly grow quickly.

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Podcast Transcript

Intro: Hello, Chris Guthrie here, host of Sellercast. And in today’s episode, I speak with Jon who has been doing very well on Amazon. He’s up to a seven figure business, and he’s been selling for about a year. And the cool part is he talks about what he’s done with a business partnership where he set it up with a friend of his. And then, he also talks about what he’s been doing to really try and grow the business. Their next goal is $250K per month, and then to do that continuously.

He talks about how he’s able to get to seven figures a year in the first place which is really a straightforward process. I think that you’ll like it, especially if you haven’t been doing it in your own business. Let’s start the recording.

And if you enjoy this episode, be sure to leave us a review on iTunes. Just go to Sellercast.com/iTunes. Leave us a review. It really helps us out finding more people to get the show and to listen to it. And then, of course, I can go find more great guests. So, let’s start the show.

Chris Guthrie: I’m doing well. I’m excited to have you here as well. We’ve exchanged emails in the past for quite some time. I haven’t looked back to see how long ago that first email came through. But it’s been a lot of fun talking to you, so I’m glad we could do this.

So, let’s get started. How long have you been selling on Amazon for?

Jon: It’s been a short amount of time actually. I would say it’s been about a year.

Chris Guthrie: Okay, so about a year?

Jon: Yeah.

Chris Guthrie: And what led you into this business model. And then, I’d really like to also just dive into some of the particulars of what you’ve done to succeed in your business.

Jon: Yeah, I kind of have a unique story tied to your blog actually. I started reading your blog probably, gosh, about four or five years ago when blogging was big and how to drive traffic to websites and what-not. And so I decided to start my own financial blog.

I ended up selling that at the peak of blogging which was a couple of years ago in terms of the financial blogs. I sold the blog. It was extremely successful. That was extremely lucrative.

But then, I don’t know, it just hit a cap and I wanted to do a—because I never viewed blogging as a sustainable model. I didn’t view blogging as a business model, if you would. So, I always wanted to get into some product sales of some sort. But the barrier to entry was always pretty big in my mind, so I never pursued it.

And then, I got married and I had a son about a year ago.

Chris Guthrie: Congrats!

Jon: Yeah, thank you. Yeah, he’s actually one year old, so that lines up with the birth. But between getting married and having a son, that’s given me the inspiration to build something that is not only sustainable, but is scalable, and something that is big. I wanted to start a big volume, high revenue type business.

So, for me, blogging was just not working out. And honestly, I got tired of writing. So, I honestly started researching, reading blogs. Your blog I think got me started on the road towards the Amazon world. I just couldn't believe your revenue figures. I honestly thought I was reading a scam.

Chris Guthrie: Oh, my…

Jon: There’s no way. There’s no way that he started selling products on Amazon that easily. And seeing the revenue numbers you had, I’m like, “There’s no way.” So I researched for, gosh, three to six months just reading all sorts of blogs, Importing Empire, all the importing bros, all sorts of…

Chris Guthrie: Yeah, there’s so many now.

Jon: There are so many now, yeah. And I’m so cheap that I didn’t want to pay for a class. And so, I literally taught myself using all the different blogs. And so, I had a capital problem, expenses with the birth and everything. And so I brought in one of my best friends who’s also an entrepreneur.

I proposed this idea to him. I said, “Hey, these are the figures that I’m reading about online. Are you interested in being the investor?” And so, he invested, I invested some. And we launched our Amazon business about a year ago. And it’s been very successful.

So, it’s kind of a cool story, how it intertwines with your blog and the Amazon world. That’s a little background on it.

Chris Guthrie: Yeah, yeah. And I love talking about online business. That’s why we’re doing the podcast here. And it’s always funny because a lot of times, people that have been on the show so far, I’ve met or I exchanged emails with them in the past and then met them in an event or whatever. And then, full circle, they’re now on the show. So, it’s a lot of fun to do this.

So, a few other things that you actually mentioned, maybe I’m thinking of a couple of questions I want to ask. Well, one, are you able to share the URL of the financial blog that you sold just for people that might be interested in that?

Jon: Oh, gosh! Well, that’s a good question. I’ve never thought about that.

Chris Guthrie: If you can’t share it, that’s fine. Potentially, you have a personality tied to it. And in some cases, buyers like to not let people know that that person has now exited.

Jon: Come to think of it, the contract that I signed for that website, I actually can’t market it. I can’t share with other people.

Chris Guthrie: No, that’s fine. And that’s a typical type of thing. Well, it depends, I guess, on the deal.

Okay, so the other question then was a lot of people talk about wanting to start an ecommerce business. And sometimes, they have that same problem where they either lack the money to really invest in the business, and so they try and partner up with others.

And so that partnership conversation and the way that that can go, I really think it takes on a lot of different ways. There might be people that are listening now that think, “Hey, let’s get going” or typically, we have a lot of people that are already up and selling and they’re just looking for other nuggets they can apply to their business.

But in your case, can you share some of the particulars about what you did for your deal? Since we don’t know what you’re selling—and we won’t be talking about that specifically—maybe you could share some of that. I’d be interested in hearing how that…

Jon: Yeah, my situation is pretty unique. Some would say I got away with murder. But he’s one of my bestfriends, I proposed this and I basically said, “I’m going to be the brains behind this business right now. Down the road, we’ll definitely split the task up 50/50.” But really, the long-term goal is to get 90% of the business over to a virtual assistant.

So, he came on investing his own capital with no strings attached. So, we lumped his money in which was 75% of the capital that we needed. And then, I lumped my 25% in and we just went with it.

I’m not a big fan of contracts. I’m not a big fan of really formal type of agreements. So we started that way, informally, and had 100% accountability, tracking. He obviously needed to get that really paid. It was a substantial amount of money. We do Google share documents. So, we started our business with 100% transparency. But that’s not hard. We have a best friend who’s also like-minded. So first, it was no big deal.

My advice is for—and I actually told my little brother to do this. He’s going to do it with my dad. For capital, just avoid the banks, and avoid sites like Kabbage.com because they’re not going to look at you seriously until you’ve got some revenue going. I would pursue a friend or family member to invest in you.

That would be my first place to go for money. And that’s where people go for their down-payment for their homes. So, that’s not that abnormal.

Chris Guthrie: And I guess it also gives you a little bit of fire lit under your pants to make sure you do well.

Jon: Yeah!

Chris Guthrie: You don’t want to disappoint. I guess the one downside I suppose is that—well, it depends if you do have a contract or not—you obviously want to make sure you repay that in the case that something doesn’t work out. Otherwise, you might have a strained relationship moving forward.

Jon: Oh, yeah. Well, it’s funny, because I told him, I said, “Look, this business is extremely low risk, extremely low risk because you can price your Amazon products at a breakeven point and be cheaper than pretty much everybody and still sell your product.”

So to me, there wasn’t a lot of risk on his part. There wasn’t a lot of risk on my part. We just went with it.

Chris Guthrie: Let’s dive in though. Let’s talk about the business itself. You mentioned there’s a fairly substantial investment. You can share or not share, that’s fine, how much was invested?

But I’m really curious in terms of where you’re at now sales-wise one year in. You had a partner, you both split the inventory cost getting going. Where are you at right now?

Jon: We’re tracking at a million a year in revenue right now.

Chris Guthrie: Awesome! So you’ve had a six figure month already then with perhaps maybe in the previous holiday season?

Jon: Exactly, exactly. We just hit that. Believe it or not, our goal was always right around $50,000 a month. That was multiple months ago. But it seems to have grown so fast.

We hit a couple of homeruns. We have killed off a couple of products. And it’s just grown substantially in a couple of months. I mean, it’s incredible.

Chris Guthrie: Let’s talk about those then. What do you think made those product homeruns? Do you think, looking back, it was an element of luck or do you think that there were something you did that could be replicable for people who are listening. And then, also, I’d like to talk about some of the ones that you killed off as well.

Jon: Yeah, definitely. I think it comes down to experience. We use different software tools to analyze things now.

But when we first started, our first product was actually a homerun, believe it or not. It was a very low risk product. And I wanted to use something that’s really easy to source, and something to test the whole Amazon process. I still couldn't wrap my mind around how you get products from China to—

We use a third-party warehouse company in the United States. How do I get it from there to the warehouse to the Amazon warehouse. So, I wanted to use a really cheap, easy product to test the whole system.

I did an order of 250 units and found a fantastic supplier who actually is the same supplier for some of the name brands that we see in the United States. He was open to it. We did an order and we took it through the entire system, getting it to Amazon and started selling immediately.

Whenever we look at products, we’re always looking at “How can we be the standout product? How can we be the best? How can we improve our negative reviews? How can we change colors to make someone click on page one?”

And page one is always the standard. We don’t pursue a product if we can’t get on page one. We make that 100% page one in the top five. That’s always our goal.

So, we use software programs now to analyze the market and we look for—and just to clarify, when I say ‘homeruns’, we’re looking for products that do between $25,000 and $100,000. We don’t do the crazy—I would call them crazy volume products simply because competition gets nasty. And in my opinion, it puts you in a position where you have a higher rate of getting banned or suspended because someone has now—

You know, you’re dealing with high volume sellers. I just don’t want to deal with the suspension. Maybe that’s fear, I don’t know. But we stick with products where it’s easy to get on page one. To us, $10,000 a month in revenue is worth it. Our goal, obviously, is the $25,000 to $100,000 range now. But we don’t pursue things that are bringing in more than that each month.

Chris Guthrie: So, I think I misheard you at first. I thought you said, “$25,000 to $100,000 per month per product.”

Jon: That’s correct.

Chris Guthrie: So if I hear that—and people listening may have different opinions—but that almost sounds like a grand slam maybe to some people, right? If it’s a single product that can do, by itself, $100,000 a month and be a seven figure business, that’s pretty substantial.

Jon: Yeah.

Chris Guthrie: So then, how many products do you have today then?

Jon: I guess the better question would be SKUs. We have multiple variations on products. We’ve actually built out our listings with variations and we’re extremely successful doing that. So, some of our products, we have different sizes. And some of the products, we simply change the colors to offer a color that’s never been on the market before.

For example, we have a product actually. It’s a sports product. We noticed that, guess what, there’s not a lot of pink for this product. And so we’re trying to tap into the female/moms/young women’s market with the color pink. And so that’s been successful so far.

I’m having a brain fog. What was your question, Chris?

Chris Guthrie: Yeah, no, that’s fine. I was just trying to see where you’re at on that. You mentioned that you target page one and the top five positions. So, what have you done specifically to try and make sure you hit that each time? And I guess, now, you’ve said you have multiple SKUs. How many launches I guess could you say you’ve done? And then maybe you can talk about some of the launch process you’ve done as well.

Jon: We’ve done 15 launches. Five of them, we’ve killed off due to not doing enough research, the volumes weren’t there, we’re spending too much on PPC. So we have right around 10 products. We have multiple SKUs.

We probably have 20 SKUs at this point. It’s all across different categories, but we’re looking for a specific volume. And we’re looking for a specific number of FBA sellers for that specific product. And we’re looking for holes in the product—the features, the colors.

And so, we go into a market with the goal of being the number one seller in that market.

We do a lot of marketing for that product. We spend a lot of money upfront right at the launch to get reviews, to get the PPC spend amount. It’s typically higher than normal in the very beginning. And typically, we lower the price to get lots of organic traffic in the very beginning.

So, besides that, ranking for keywords with advertising, we’re slowly getting into other advertising avenues. But the Amazon sponsored ads are really are bread and butter right now. I mean, at least what we’re finding, the recipe for gold is if you feature a product or sell a product that truly is unique, and you’re building off of someone else, and it’s better, you combine that with low bidding numbers, you’re going to have a great return on investment.

So, our experience is that if you do those things and find a product that has that perfect recipe, you’re almost guaranteed with advertising to be extremely successful.

Chris Guthrie: Yes, that’s great. And I think that I wanted to come back and unpack a few things that you talked about. So, one of the things you mentioned was that you’re across multiple, different markets. I’m assuming you have some sort of generic brand name, and then you apply a more specific brand name for those products that’s in those categories.

Jon: Yeah, exactly.

Chris Guthrie: What was the decision process behind that as opposed to staying within one space? Does this just sort of goes back to what you said in the very beginning of our conversation that “I want to build something truly huge”? And so, if you’re building something that’s truly huge, then maybe you don’t want to niche it down to one specific space and stay in that area, maybe bundle it up and sell it or something later.

You’re thinking, “Hey, let’s just go where we know we can sell and grow wherever we can grow.” And even if it’s kind of somewhat unrelated, some of the products, it doesn’t matter.

Jon: Well, that is exactly what we do. We’re scrappers almost. We have a long-term vision of building our various brands. But right now, we are truly focused on finding those bestsellers.

And honestly—and I’ve polled a lot of people about this—when you’re on Amazon, do you ever notice or ever click on the actual seller, the storefront? Every single person says no. They only notice two things, the price, the pictures and the brand name.

So, if you make the brand name really, really nice, really, really applicable to the product, that’s what they’re looking at. I’ve seen some crazy general store names for their storefronts and they’re pulling in six figures. So obviously, people don’t care that much.

We made a very general—our name is extremely classy. And it definitely plays to the emotion of female customers—knowing that the majority of customers on Amazon are females. We did that strategically from the very beginning. But we are looking at all sorts of markets. If a 24-pack of nuts and bolts are selling in the home improvement department, and we don’t have any products on the home improvement department, and that product is selling $25,000 and there’s one seller, well, we’re going to go in.

So, that doesn’t scare us. The worry of having 25 different markets under our storefront does not scare us at all. So, we do it on purpose.

Chris Guthrie: I like that. I think you’re definitely right. People don’t usually click those seller names. And I think most of the time, when they’re looking in that general area of the screen, they’re just looking to see it has that little prime checkbox so that they can make sure they get the free shipping. And that’s something I think people are looking for when it comes to that spot.

Now, going back to the specific products now that you’re doing, if you’re going into different areas—part of the reason why people like to go into one specific spot—

Let’s say they’re trying to build up their website. It’s on a specific niche—say, it’s the barbecue space. And then they get a bunch of people that are interested in barbecuing. And they can, of course, easily launch these products.

I’m just assuming you’re just using some external review sources or you’re using some extra promotion attempts. You mentioned that reviews, PPC, lowering your price. Are you trying to do anything especially since you have the experience of building up that blog and using that to make money and then you sold it. Are you trying to build a website to help drive traffic to these product listings?

Jon: Yeah, that’s actually our next step. We’re going to be now reinvesting our profits into Shopify websites. We’re also looking at WooCommerce and using Wordpress. So, it’s something we’re looking at, but it’s tough because we’re becoming bestsellers across the board in some of these markets.

And so, we’re so focused on growth—our next goal is $250,000 every month in revenue—that the building the blogs, building websites up, it’s kind of taking a backseat to be honest.

It’s definitely on the to-do list. We have a joint to-do list. My business partner is looking into those types of websites. We’ll explore it. But right now, if we can focus on increasing revenues simply by launching new products, launching variations, that’s what our focus is right now.

Chris Guthrie: The cool part too is I know you’re calling me from—I believe you said it was your day job, right? It’s like your lunch break right now at your day job that we’re doing this. And so you have an ecommerce business, and you partnered with a friend, you have a seven figure ecommerce business, you still have your day job, and you’re still focused because you want to be able to just—I’m assuming you’re reinvesting almost—or nearly almost—all of the revenue back into more products, more inventory, et cetera?

Jon: Yeah, 80% is reinvested.

Chris Guthrie: Yeah, I love it. So, I’m assuming you’ve paid each other off your initial capital that you’ve put in the first time?

Jon: Yeah, the initial capital has been paid off. And now, we’ve kind of stuck to a figure of 7.5% to 10% each. That changes every month because we might want to reinvest, we might want to launch an extra product one month. So, that’s the strategy behind that. But paying it out definitely makes you hungrier because it changes how you view it. And also, if you have an LLC with an S-Corp, you’re required to pay a fair amount to yourself as an employee anyway.

That’s what we’re doing. And as we grow, we’re not going to increase the percentage per se. The payouts every month will just naturally increase.

Chris Guthrie: Yeah, because your business is growing. So then, I want to talk a little bit too about—you mentioned originally how you had a partnership where you were going to be the brains. He was going to provide some of the capital. Now that you’ve been doing this for quite a bit longer, how do you have the work spit up? What are you spending your time on these days after you get home from work basically?

Jon: I would say I am the ads, marketing and website tweaking. My business partner is everything financial, website development, a lot of miscellaneous items, making sure that we have everything in line. He does all of our cost tracking which I personally hate. So, he does all of the expenses, the shipping cost. He deals with DHL and UPS. He deals with the sea shipping companies. So, we kind of just split up the work naturally for what makes sense right now.

But like I said, our business relationship is more than just business, we’re best friends. So, one month, I might do more work than him. Then the next two months, he might do more work than me. We don’t think about it as “Who’s doing more work?” We’re simply thinking about it as “If our revenue continues to grow, we’re both going to work as hard as we can.”

We don’t really track a whole lot, but we do have the tasks split up like I’ve just covered.

Chris Guthrie: So it works well for you guys?

Jon: Yeah, it does. Yeah.

Chris Guthrie: Awesome! So, we have probably about five minutes left or so. I want to focus on where you see the most value from for the remainder of our conversation? What do you think are some of the main things that would help people that you’ve learned?

Jon: I get tired of general marketing advice.

Chris Guthrie: Yeah, some specifics. Let’s cover specifics.

Jon: Yeah, exactly, specifics. I would say to spend a significant amount of time doing your research. I would take a class. Looking back, I would take a class because with the types of revenue numbers that we’re looking at, let’s just say the class is $500, it’s extremely worth it. It reduces your time. Instead of me spending six months like I did to research on my own, you could spend a couple of weeks and learn it yourself through a class.

So, I would take a class. I would really look at revenue numbers. There are multiple software tools that are out there. We use one that plugs directly into Chrome. But I would jump in. I would jump in, and I would really focus on, in the very beginning, going slow.

I would definitely say to find a business partner. There’s a lot of work involved. I personally would not want to do it on my own. And that’s about it. It’s just about finding those products.

And to be honest with you, we find our products—and this is just a tip for all the listeners. This is what I do every day. I brainstorm ideas, I go on Amazon and I actually don’t even go to the bestsellers anymore. So, I go into searching products that I know of. And then, I go look at products that were purchased by that same customer.

So, under each products listing, there’s a little area that says ‘also purchased’. I click those listings. And then, I go into that same section on that new listing, and I start doing research that way. And then, I look at the revenue numbers—and there are all sorts of tools out there. That’s easy, to get the tool—and then just researching that main keyword. What is the keyword for that product? Go look at what’s your competition.

And then looking at staying away from an Amazon-saturated market and sticking with the market where you’re competing against other third-party sellers.

So, that’s about it. There really is no secret behind an Amazon business. That’s what I found. There is no secret. It’s mind-boggling that the market as a whole is not saturated because there is no secret, that people selling ‘Amazon secrets’ online and all these crazy websites and blogs are talking about it in a broad basis, there really is no secret recipe.

It’s all about research. It takes patience. We didn’t get a payout for close to, gosh, a year. So keeping a long-term of vision off—

And if it makes people feel better—it made me feel better—knowing that most businesses are in the red for the first five years. If I’m in the red for a year with Amazon, hey, you’re beating the average business across the world.

So, that’s how I look at it. I just encourage all the listeners to this podcast just to go for it. There’s very little risk and the long-term payout is huge. That really is the key. It’s a very low-risk business. That’s what I like about it.

Chris Guthrie: Yeah, I really think that one of the biggest things—especially for those who aren’t doing this now—is just the takeaway that you’re willing to reinvest a lot of the profits just right back in into the business as long as possible. And then, the longer you can do that, the longer you can delay paying yourself, and then maybe just paying yourself a bit, the better you’re going to be off. I love that.

Jon: Yeah, exactly.

Chris Guthrie: So Jon, thanks so much for coming on the show. I think it’s a lot of fun. And yeah, I’m glad you’re able to come in. It’s nice again. We’ve got another full circle thing here. You’ve read my blog randomly. You found it on the Internet. I hear that a lot when I talk to people in person.

So, I’m glad you’re doing well. I wish you the best. Thank you so much.

Jon: Yeah, you as well, Chris. Thanks for the opportunity.

Chris Guthrie: Thanks, Jon.

Alright! That was the episode with Jon. I really enjoyed his philosophy and his approach to this business in that they’re really focusing on reinvesting to grow. They’re only taking a small single-digit percentage each of the profits that they’re making so they aren’t taking too much out of the business.

And I think that, in a lot of cases, really is what helps separate people that are doing really, really well and growing substantially and those that are sitting at a specific level. So, if you’re already in your business now and you’re trying to decide what you can do to really scale up and you’re taking a lot of capital out, then maybe that’s something you need to reconsider.

He still has a day job. And he told me afterwards—I should’ve mentioned this and asked him on the show—“I don’t see leaving my day-job any time soon. I want to focus on growing the business. And the best way to do that is to not be drawing down a huge salary from it.”

So, that’s what they’re doing. And hopefully, you enjoyed the lessons he talked about in the show. You can go to sellercast.com/itunes. Leave us a review like I mentioned before. We’d really appreciate that. And thank you so much for listening. We’ll see you in the next episode.